Title: The relationship between location-bound advantages and international strategy: an empirical investigation

Authors: Fang-Yi Lo; Joseph T. Mahoney; Danchi Tan

Addresses: Department of International Trade, Feng Chia University, 100, Wenhwa Rd., Seatwen, Taichung, Taiwan. ' Department of Business Administration, College of Business, University of Illinois at Urbana-Champaign, 140C Wohlers Hall, 1206 South Sixth Street, Champaign, IL 61820, USA. ' Department of International Business, National Chengchi University, 64, Zhi-nan Rd. Sec. 2, Wenshan Taipei 116, Taiwan

Abstract: This paper examines the impact of location-bound advantage on the internationalisation strategy of Multinational Enterprises (MNEs). The extant research literature suggests that an advantages location boundedness may be driven by the nature of the advantage itself, organisational embeddedness and environmental embeddedness. We posit that these different drivers of location boundedness exert different impacts on internationalisation strategies. Our empirical results reveal that organisational embeddedness lowers the breadth of internationalisation of MNEs and increases the tendency of these firms to employ a global strategy. We also find that MNEs whose advantages are tacit and complex have a lower depth of internationalisation and are more likely to expand into culturally similar countries. Finally, our results show that MNEs whose advantages are highly embedded in the home environment tend to adopt a multi-domestic strategy and decentralised organisational structures.

Keywords: location-bound advantages; multinational enterprises; MNEs; international strategy; internationalisation; location boundedness; organisational structure.

DOI: 10.1504/IJSCM.2011.044941

International Journal of Strategic Change Management, 2011 Vol.3 No.4, pp.281 - 301

Available online: 16 Jan 2012 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article